Insurance Web Aggregator License

An Overview of Insurance Web Aggregator License

An insurance web aggregator acts as an intermediary or an insurance company that provides information about the insurance products and policies offered by different companies through a website or an online portal. Insurance web aggregators must obtain an insurance web aggregator license from the IRDAI before commencing business operations.

It compares insurance products and their prices on such an online platform to help the customers analyse the best product and make an informed decision before buying any insurance product. The insurance web aggregator is a business entity registered under the Companies Act and regulated by the IRDAI (Insurance Web Aggregator) Regulations 2017.

What is the Role of the Insurance Web Aggregator?

The main role is to facilitate comparison between different insurance products. Aggregators have contracts with insurance companies, which are obligated to share all pertinent information. Here, we have discussed below in pointers for your better understanding:

• The insurance web aggregators then present the information in a specific format on their website. 
• The insurance web aggregators are prohibited from showing ratings, rankings, endorsements, or best-sellers of insurance products. 
• They are unable to showcase any items besides insurance products, and they are also prohibited from running advertisements.

What are Functions Performed by Insurance Web Aggregators?

The insurance web aggregators enable users to compare and buy different insurance policies. They offer resources for comparing premiums, coverage, and conditions from different insurers, making the purchasing process easier and providing customer support and educational materials to assist in selecting the appropriate insurance product.

A web aggregator performs the following functions:

• Providing the relevant information related to insurance products.
• Comparison of insurance products.
• Display information related to insurance products on the website.
• Assisting in the sale of insurance policies.
• Solicitation of policies.

What are the Benefits of Insurance Web Aggregator?

Obtaining an insurance web aggregator enables companies to expand their customer base and cut down on advertising expenses. It also gives customers a simpler way to analyze and select insurance products, resulting in improved offers and a more efficient market.

Here, we have discussed below the benefits of insurance web aggregators for better insight:

1. Time & Energy Saver

An insurance web aggregator helps users save time and effort by eliminating the necessity of going to various insurance company websites to compare policies one by one. Users can use an aggregator to compare several policies at once conveniently.

2. Offers Better Pricing

Insurance web aggregators collaborate with numerous insurance providers, leading to competition between insurers. It leads to improved pricing for customers as insurance providers vie for offering the most competitive rates and advantages.

3. Offers Expert Opinion

Insurance web aggregators typically employ a group of specialists available to offer guidance to users in selecting the most suitable policy. Users can inquire and receive advice from these professionals to assist them.

4. Realtime Alerts & Updates

Users are informed about the newest products, updates in regulations, and market trends that may affect their insurance choices in the present and future.

5. Policy Management

Certain platforms provide features for overseeing bought policies, such as notifications for premium payments and renewals, online storage of policy papers, and aid with processing claims.

Who Regulates Insurance Web Aggregator License?

The primary regulatory authority for the insurance web aggregator license is the Insurance Regulatory and Development Authority of India (IRDAI). The Insurance Act 1938 and the Insurance Regulatory and Development Act 1999 are the regulations behind Insurance law.

What is the Market Size of an Insurance Web Aggregator?

The worldwide insurance aggregators sector was worth $19.3 billion in 2021, with estimates suggesting it will hit $130 billion by 2031, growing with CAGR, with a 21.2% annual growth rate expected between 2022 and 2031. An insurance aggregator utilises monitoring and analysing customer behaviour to enhance company operations.

How do Insurance Web Aggregators Earn Money?

The insurance web aggregators earn money through commissions from the insurance companies when any policy is purchased through their platform. Usually, you see that the insurance web aggregators do not charge their users for using their services.

The revenue streams for insurance web aggregators are mentioned below-

• Commission from Insurance Companies (Primary Source)
• Targeted Advertising (Limited Source)
• Renewal Commissions (Secondary Source)
• Premium Comparison Tools (Value-added Service)
• Strategic Partnerships 
• Freemium Model 

Eligibility Criteria for Insurance Web Aggregator License

For issuance of the certificate of registration for an insurance web aggregator license, we have discussed below the following criteria fulfilled by the applicant such as:

• A Company formed under the Companies Act 2013; or
• Limited Liability Partnership formed under the LLP Act 2008. 
• Partners should not be NRI or a person who is resident outside India under the FEMA, 1999; or
• Any other individual who is recognised as a web aggregator.
• MOA and AOA. 
• The applicant must not be engaged in any other business other than the web aggregation business.
• The applicant must ensure that he is not registered as an insurance agent, corporate agent, micro-insurance agent, TPA, Surveyor and Loss Assessor, Insurance Marketing Firm, or any other insurance intermediary.
• The applicant should not have a referral agreement with the insurer.
• The applicant would be granted only one certificate for insurance intermediation. If any entities are engaged in insurance intermediation activities, then the application for a web aggregator’s license would be determined based on the application's merits.
• The applicant must have a website for insurance web aggregation.
• The principal officer must possess the necessary qualifications for conducting web aggregation.
• The principal officer must have undergone the necessary training and passed the examination of the insurance web aggregator required by the Insurance Regulatory and Development Authority of India.
• The key management executives (Director/ Shareholders/ Other Principal Officers) must fulfil the FIT and PROPER Criteria test in FORM D- Schedule-I
• The authorised Verifier should have gone through the prescribed training and passed the examination conducted by the IRDAI. 
• The insurance web aggregator has not violated any obligations specified in Form-V and Form-W.
• The IRDAI has not withdrawn the certificate of registration of the insurance web aggregator registration.
• The authority should have an opinion that the grant of the certificate will be in the interest of the policyholders. 

Documents Required for Insurance Web Aggregator License

Insurance web aggregators must follow stringent regulations and provide various documents to attain the license, such as a registration form, business proposal, financial evidence, and information on insurance provider contracts.

There are the documents required for obtaining an insurance web aggregator license mentioned below to give you a better idea:

• Certificate of Registration of Company issued by the ROC;
• MOA and AOA 
• Copy of PAN Card 
• Detail of Directors/Partners of the Company 
• Detail of the Principal Officers 
• Preview of the contents of the website proposed for the License;
• Details about the hosting place of the website;
• Details about the responsible persons for the website’s content;
• Net worth certificates 
• Shareholding pattern of the company as certified by the CA;
• Audited financials for the last three years in case of an existing company or latest as of date, in case of a new company;
• Details of the IT infrastructure available with the applicant;
• Organisational Chart with various designations with their roles;
• A user I.D. and temporary password (with only view permission) to verify the Aggregation Website(s)/Portal/LMS by IRDAI I.T. (Information Technology) Department in a closed cover.

What are the Capital Requirements for a Web Aggregator License?

The capital requirement for the insurance web aggregator license is mentioned below for your better understanding:

1. The applicant has to have a minimum paid-up capital of 25 Lakhs.
2. Where the Insurance Web Aggregator is a company according to the Companies Act 2013, the capital must be issued and subscribed to in the form of equity shares.
3. In the case of an LLP, the partner's contribution must only be in the form of cash.
4. The shares of the web aggregator held as capital must not be pledged in any manner to secure credit.

Net Worth Requirements for a Web Aggregator License

The net worth requirements for getting an insurance web aggregator license are mentioned below:

• Net worth must not fall below 100% of the capital requirements.
• The insurance web aggregator must review the net worth status every half year as of 30th September and 31st March every year and report non-compliance, if any. This must be done within 15 days, and such requirements must be met within 30 days, followed by confirming compliance with the IRDAI.
• If the Insurance Aggregator is unable to maintain the net worth after 30 days, then the business related to the aggregator should be stopped.
• The Chartered Accountant finally authenticates the net worth certificate. 

Procedure for Insurance Web Aggregator License

The below-mentioned procedure needs to be followed for obtaining the Insurance Web Aggregator License such as:

1. Fulfilling the Essential Requirements

The applicant must fulfil the essential requirements mentioned above before applying for the license grant.

2. Filing the Application

An Applicant who wants to register as a web aggregator must make an application in Form- A, along with the application, a fee of Rs. 10,000/- plus tax has to be paid through electronic transfer or D.D payable in favour of the IRDAI payable at Hyderabad mentioning the services provided by the applicant.

3. Submission of Application

The applicant needs to apply along with the Documents to initiate the verification process.

4. Verification of Application Documents by the Authority

After this, the authority will verify the application and Documents to check if the applicant has complied with all the essential requirements. In case of any discrepancy, the authority will reject the application and communicate this to the applicant within 30 days of such rejection.

Note- A new application for the certificate of registration can be made only after one year

5. Issuance of Registration Certificate by the Authority

If the authority feels that registration would be in the interest of the policyholders, it would grant the certificate of registration in Form E. This would allow the applicant to function as an insurance web aggregator.

Pre-Requisites for the Grant of Insurance Web Aggregator Certificate

Certain conditions have to be followed by the applicant for the grant of a certificate of registration, such as:

• The applicant can only solicit insurance.
• The applicant shall comply with the provisions of the IRDA Act 1999.
• The applicant should inform the authority of any material change or false/ misleading information for previously provided Documents.
• The Insurance Web Aggregators should take adequate steps to redress grievances within 14 days.
• The Insurance Web aggregator shall maintain the code of conduct.
• The Insurance Web aggregator shall solicit and procure a reasonable number of insurance policies commensurate with the resources.
• The authority has the power to appoint another investigative agency to check the books and accounts of the web aggregator.

What is the Validity of the Insurance Web Aggregator License?

The Certificate of Registration for an insurance web aggregator is valid for three years from the date of the issue. The insurance web aggregator license has to be renewed within 30 days before the 3-year period expires by applying and paying Rs.25,000 with cost.

Renewal of Insurance Web Aggregator License in India

The following procedure is required to renew an insurance web aggregator license mentioned below:

• The application for renewal for the Insurance Web Aggregator License should be submitted in Form- F of Schedule II before 30 days of the license expiration. The applicant can apply for renewal of the license 90 days before the expiry of the license.
• Documents should be submitted in Form- G with the application for registration.
• The application for renewal of the registration will be submitted along with the fee of Rs. 25,000 with taxes. The payment must be made electronically or in a demand draft in favour of the Insurance Regulatory and Development Body of India, Hyderabad.
• If an application is made after the expiry of the above period but before the actual expiry of the certificate, then a payment of Rs. 100/- must be made with the application.
• If there is a delay in making an application for registration renewal, the applicant must do the same. Within 60 days of the expiry of the certificate of registration, along with the additional fees of Rs. 750/-.
• Any application received by the authority after the expiry of the 60 days would be considered only after one year. During this one year, the web aggregator must not conduct or solicit any form of business.
• An Insurance Web Aggregator, before seeking a renewal of a certificate of registration, shall ensure that the Principal Officer and the Authorised Verifiers have undergone renewal training, not before six months of the expiry of three years validity of his previous fresh/ renewal training from an institution recognised by the authority.
• If the authority considers that the requirements have been met, it will provide the certificate of renewal in Form- H.

What are the Fees for an Insurance Web Aggregator?

The fee for an insurance web aggregator will be inclusive of government fees of around Rs. 10,000, which can be refundable, plus other professional charges.

Timeline to Obtain Insurance Web Aggregator License

After fulfilling all the regulatory requirements of IRDAI, the business entity usually takes around 5 to 6 months to obtain an insurance web aggregator license in India.

How will Enterslice help you Obtain a Web Aggregator License?

Enterslice offers consultancy services for legal, financial, and business advice, along with help in acquiring necessary licenses for operating in sectors like finance and insurance. We are here to assist you in various ways to acquire an insurance web aggregator license in India, overseen by the IRDAI.

We have discussed below how we can assist your company in obtaining an insurance web aggregators license:

1. Application Process

We can assist you with the application process, making sure all forms are completed accurately and submitted with the proper documentation.

2. Document Preparation

We can help with preparing and submitting all required paperwork. This consists of the application form, information about the directors and key management personnel, infrastructure specifics, a business proposal, and any additional paperwork IRDAI needs.

3. Infrastructure & Technology

Because web aggregators function on the internet, we can advise on the necessary technology infrastructure as per the IRDAI's regulations. This consists of ensuring website security, implementing data protection measures, and setting up IT systems needed to run a web aggregator platform.

4. Advisory Support

We will guide how to remain in adherence with the current regulatory standards established by IRDAI. This covers guidance on corporate governance, financial needs, customer protection regulations, and regular reporting duties.

5. Assistance After Licensing

Once the license is obtained, we can offer support services to help the business run smoothly and meet all regulatory obligations.